US Diesel Prices Slump in First Half of December, Outlook remains Stable to Bearish in 2024

Texas (USA): In the first half of December, the price of Diesel shows a decreasing price trend in the US market. The price decline occurred as the refining uplifts. Thus, led to an increase in supply in the local warehouses amidst low end uses. 

The national average price for a gallon of Diesel fuel fell for another 5.4 cents last week, dropping below USD 4 per gallon. US retail Diesel price reached at a level of USD 3.894  per gallon during the week ending 18th December 2023 , whereas earlier in the first week week the price was found down around 3.987 dollars per gallon. The change of approx. 1.30 % can be seen. Diesel is now 87.5 cents per gallon cheaper than last year. This fall is seen consecutively sixth time in a row, which is approximately 45.3 cents per gallon.

The crude oil inventories fell by 4.6 million barrels per day last week and on the other side increase in US oil refineries was observed. It rose by 179,000 barrels per day last week and the utilization rates increased by 0.7% to 90.5% of total capacity.  The refining rate is increased mainly as the supply capacity is increased and demand can be seen less due to which decrease in Diesel fuel prices can be seen. Diesel demand as compared with production is weakened in the underlying the crude oil market pointing to further weakness in the prices. Overall, the downturn in the prices of Diesel is due to the underlying benchmark crude oil prices.

Transport sector, which is the prime consumer of Diesel, thus making Diesel an essential commodity. So, the price of Diesel becomes an important component that people would look out for in world. Diesel fuel is primary fuel source which plays a significant role in North American freight transportation has shown freight rates low. This is because there is delay in import shipments due to unprecedented congestion at the Panama Canal. The resulting delays has already upended global trade. Furthermore, seasonal lull in the transportation industry in peak winter has added to the bearishness in Diesel prices in the US.

According to ChemAnalyst, the estimations have been made that Diesel fuel prices are expected to remain stable in the upcoming year with little to no expectations of Diesel prices going haywire and setting records in 2024. The demand and supply dynamics are expected to remain balance with minor disruptions weather-related or otherwise to prompt fluctuations during the year. The expectation given by OPEC+ to reduce oil production in near future has supported the rise in crude oil prices continuously. However, record crude oil output by the US likely to stabilize the global crude oil market.